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Although we disagree with the idea that "the tape tells all," it is important for all traders to stay on top of key technical happenings on the charts. Below is our current "executive summary" take on the State of the Tape.
Technical Talk: October 29, 2010
Current Strategy:
The current waiting game has led to a sideways consolidation phase this week. And while some further downside testing may take place as the big events occur next week, the intermediate-term trend is likely to remain intact. As such, we should continue to give the bulls the benefit of the doubt here.
We'd be Short-term Buyers At: A close above 1186 on S&P
We'd be Short-term Sellers At: A close below 1170
Trend and Momentum Indicators:
Short-Term Trend: The back-and-forth action has turned our short-term trend rating neutral. However, we do not that the 5-day ma is above the 10-day, and the 10-day is above the 25-day - and that all three are rising.
Intermediate-Term Trend: No change again today. Despite the up-and-down movement we've seen intraday, the bulls get the benefit of doubt here as the intermediate-term trend is up.
Market Internals: Our short-term TBC model remains neutral while the intermediate-term model is positive. So, given the price action, this remains a positive.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Nothing new to report on the momentum front. The indicators are in decent shape.
Support/Resistance Zones for S&P 500:
- Current Support: 1170ish
- Current Resistance: 1185
Early Warning Indicators:
Overbought/Oversold Condition: Our overbought indicators are telling us to exhibit some caution, but are not at extreme levels at this stage.
Investor Sentiment: Sentiment continues to be a warning sign.
Chart Watch:
Below are snapshots of the two main charts we watch closely each day from a technical perspective. The indicators we display on the charts below include: 50 day simple ma (purple), 25 day weighted ma (cyan), 10 day exponential ma (thick orange), 200 day simple ma (thin orange), and stochastic %K using 14 and %D.
S&P 500:
NASDAQ Composite
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